Cover image for The Greenspan effect : words that move the world's markets
The Greenspan effect : words that move the world's markets
Sicilia, David B.
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Publication Information:
New York : McGraw-Hill, [2000]

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xiii, 273 pages : illustrations ; 24 cm
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HB119.G74 S56 2000 Adult Non-Fiction Central Closed Stacks

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Alan Greenspan has delivered more than 30 speeches, and the vast majority of those speeches have sent the stock market tumbling. This volume focuses on this phenomenon, and aims to shed light on the potent and puzzling relationship between Greenspan and the world's capital markets.

Author Notes

David B. Sicilia, Ph.D., is an experienced consultant, business historian, and author. He has received numerous awards and fellowships, including the Charles Warren Fellowship from Harvard University and a Sloan Foundation grant for his work on stakeholder theory.
Jeffrey L. Cruikshank is a cofounder of Kohn-Cruikshank, Inc., a Boston-based communications consulting firm.

Reviews 3

Booklist Review

Who is the most powerful person in the world? The authors, both consultants and cowriters of The Engine That Could, say that Federal Reserve Chairman Alan Greenspan fits the bill, as his pronouncements can cause interest rates to soar or plummet. Even the smallest statement from Greenspan can send the market into a tizzy, and the authors dissect virtually every speech or written statement the chairman has made since 1987. Even more impressively, they go the extra mile and forecast what Greenspan will say in the future and what impact his words will have on the global economy. It is difficult to convey the level of detail to which the authors go; much of what is here is extremely technical, and the casual investor will likely steer clear after just a couple of chapters. However, the analysis and subsequent predictions are well suited to the serious economist. In post^-cold war America and the world, Greenspan's utterances have an obvious impact, but never before have they been so exhaustively scrutinized. --Joe Collins

Library Journal Review

The words of Federal Reserve Board chairman Alan Greenspan are said to have the power to move markets. Sicilia, a business historian, and Cruikshank, a communications consultant, set out to prove that theory through examination of movements of the Dow Jones Industrial Average (DJIA) in the days surrounding several of Greenspan's speeches. And, indeed, they discover a "Greenspan Effect": Greenspan's words significantly changed market valuations for several daysÄbut the DJIA tended to return to its trend after that time. The bulk of the book consists of short excerpts from Greenspan's speeches, organized by topic, with brief passages of explanation; the authors also provide a biographical sketch of Greenspan and a brief history of central banking in the United States. Of particular interest are Chapter 29, explaining Greenspan's opposition to federal budget deficits, and Chapter 37, providing 16 tips to keep in mind when interpreting Greenspan's speeches. Recommended for both public and academic libraries.ÄA.J. Sobczak, Covina, CA (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.

Choice Review

The premise of The Greenspan Effect is that the Fed chairman reveals his consistent theoretical orientation, and occasionally the future direction of interest rates, in his public utterances. The authors sift through and comment on excerpts of Greenspan's speeches and congressional testimony, which address numerous topics including whether there is a "new" economy, the future of the Federal Reserve, the evolution of financial services, and the economic impact of technological change. They close with a disappointing chapter purporting to show investors how understanding Greenspan can enhance their market performance. Steven Beckner's Back from the Brink: The Greenspan Years (CH, May'97) provides more depth on Greenspan and on the Federal Reserve. Linking the chairman's comments to stock market gains suggests a marketing ploy, but Sicilia and Cruikshank do provide a useful analysis. Their strategy of providing numerous quotes of Greenspan followed by a short interpretation is quite effective. Greenspan, an economist who talks largely about banking and financial markets using terms most familiar to other economists, seems an unlikely candidate for a cult of personality, but the financial press has elevated him to cult status. The authors' commentary on the sayings of Chairman Greenspan usefully explicates the ideas of this interesting man directing a powerful institution. Public and undergraduate library collections. R. T. Averitt; Smith College

Table of Contents

The Power of Greenspanp. xi
Part I Greenspan, the Fed, and the Stock Market
1 The Fed Chairman as World Celebrityp. 3
2 The Fed's Levers of Powerp. 15
Part II Words That Lift Markets
3 The "Exceptional" Economyp. 29
4 The "Oasis of Prosperity"p. 35
5 The "Salutary" Sell-Offp. 42
6 The Wealth Effectp. 47
Part III Words That Sink Markets
7 "Irrational Exuberance" in the Stock Marketsp. 55
8 Battling Inflationp. 62
9 Tight Labor Marketsp. 68
10 Financial Contagionp. 74
Part IV Remaking Financial Institutions
11 Reforming Social Securityp. 83
12 Merging Commercial and Investment Bankingp. 90
13 Reforming Federal Deposit Insurancep. 95
14 Derivativesp. 99
Part V World Crisis Manager
15 The Asian Crisisp. 109
16 The Crash of '87p. 115
17 The Gulf Warp. 121
Part VI Competing in the Global Economy
18 U.S. International Competitivenessp. 129
19 Foreign Investment in the U.S.p. 134
20 Economic Reform in Russia and Eastern Europep. 139
21 The Virtues of Capitalismp. 144
Part VII Critical Investments
22 The American Education Systemp. 151
23 Consumer Saving, Credit, and Retirementp. 155
24 Corporate Restructuringp. 160
25 Income Inequalityp. 165
26 Small Business Financep. 169
27 The Farm Economyp. 174
28 Mortgage Financep. 179
29 The Federal Budget Deficitp. 184
Part VIII Greenspan Looks Toward the 21st Century
30 The "New" Economyp. 193
31 The Future of the Federal Reservep. 201
32 The Future of the Banking Systemp. 205
33 The Future of Financial Servicesp. 210
34 Technology and the Futurep. 214
Part IX The Investor's Roadmap to Greenspan
35 Explaining the Greenspan Effectp. 221
36 The Game of Deciphering Greenspanp. 228
37 What Matters--and Doesn't--When the Chairman Speaksp. 235
38 Greenspan and the Future of the Stock Marketp. 243
Notesp. 251
Bibliographyp. 269
Indexp. 271